Tokyo: Japan’s Nikkei average clawed its way up into positive territory on Thursday, 22 May, rising 0.1% by midafternoon as Chiyoda Corp. gained on a brokerage upgrade, although a stronger yen put pressure on exporters such as Canon Inc.
The Nikkei had fallen almost 2% earlier in the day.
The rebound came as a domestic fund was launched worth 70 billion yen ($680 million) in Japanese stocks, which also helped spark short-covering, said Akihito Yamanoi, general manager at AIG Global Investment’s Japan equity department.
“Investors were shocked and dumped stocks at the open after the Dow lost more than 200 points, oil topped $132 a barrel and the yen firmed. But investors have now begun to feel comfortable buying due to demand and supply reasons,” he said.
“Still, inflation worries in the US, Europe and Japan seem to be capping the upside in the markets. High oil prices could trigger a slowdown in the global economy.”
As of 0530 GMT, the benchmark Nikkei average rose 11.93 points to 13,938.23. The broader Topix added 0.3% to 1,374.17.
US stocks tumbled on Wednesday, posting their biggest losses in two weeks, amid fears the US economy faces 1980s-style stagflation after the Federal Reserve slashed its economic growth forecasts while raising estimates for inflation.
The dollar briefly dipped 0.2% to a week’s low of 102.78 yen on electronic trading platform EBS. A stronger yen curbs exporters’ overseas profits when brought back to Japan.
Chiyoda surged 6.6% to 1,014 yen, one of the biggest positive contributors to the Nikkei 225, after CLSA lifted its rating on the engineering firm two notches to “outperform” from “sell”.
“Having passed the construction peak in Qatar, Chiyoda is starting to throw available manpower towards new orders,” wrote analyst Takeaki Ueno, adding that he had raised his Chiyoda profit and order forecasts for this business year.
Exporters fell, with Canon down 0.7% to 5,420 yen and Toyota Motor Co shedding 1.5% to 5,160 yen.
JFE Holdings Inc declined 2.6% to 6,030 yen after JFE Steel, a unit of the world’s third-biggest steel maker, said it had failed to conduct a required test on the strength of steel pipes mainly used for oil rigs.
But Nippon Oil, Japan’s largest oil distributor, and other energy-related shares rose, after crude oil soared to a fresh record high above $135 a barrel on Thursday on fears of a supply crunch and a weaker dollar.
Shares of Nippon Oil climbed 4.9% to 830 yen, Nippon Mining Holdings gained 4.2% to 720 yen and oil developer AOC Holdings jumped 5.8% to 1,396 yen.